IMF latest to drop Korea’s growth outlook

The International Monetary Fund (IMF) was the latest to drop Korea’s economic outlook for this year.

The international organization on Tuesday released its outlook that lowered Korea’s growth projection for this year to 2 percent, a sharp drop from just six months ago when it expected the economy to expand 2.6 percent.

If the prediction is correct, it would be the slowest growth in a decade after the Korean economy was affected by the global crisis in 2008 and grew just 0.7 percent in 2009.

The IMF also lowered next year’s outlook from 2.8 percent in April to 2.2 percent.

The revised outlook was the result of the slowing Chinese economy and the ongoing trade war between the United States and China.
While the IMF has also lowered other outlooks on global economies, the changes were less steep than Korea’s.

The IMF projected this year’s global economy to expand 3 percent, down from its 3.3 percent outlook earlier this year. Next year’s growth was also changed from 3.6 percent to 3.4 percent.

Advanced economies’ growth this year was lowered from 1.8 percent to 1.7 percent while emerging market’s was lowered from 4.4 percent to 3.9 percent.

The Chinese economy is expected to grow 6.1 percent, down from 6.3 percent.

However, U.S. economic growth has been raised from 2.3 percent to 2.4 percent.

Recently, major institutions have been lowering their projections on the Korean economy to 2 percent or lower.

Last week, according to Korea Center for International Finance, nine investment banks’ average predictions on the Korean economy including Goldman Sachs, JP Morgan and BoA Merrill Lynch for this year was 1.9 percent.

The Organisation for Economic Cooperation and Development (OECD) last month lowered Korea’s outlook from 2.4 percent in May’s projection to 2.1 percent.

The revised outlook came two days after the Blue House senior secretary for economic affairs claimed the Korean economy was doing fine.

“[The Korean economy] is doing relatively well,” said Lee Ho-seung during a Blue House press briefing on Sunday. “It is irresponsible to talk about [an economic] crisis so casually.”

The Blue House economic secretary said the current situation that the Korean economy is facing is not only a crisis that is exclusive to Korea, as the main problem lies in the global economic slowdown.

“Around 2018, the global economy started to slow, and for roughly two years it has been falling,” Lee said. “For a country that grows from the large amount of exports, it is inevitable to be affected by the [economic] cycle and [global] economy,” Lee said.

Citing the OECD’s latest forecast, Lee said other than the United States, which is expected to grow 2.4 percent this year, Korea’s 2.1 percent growth is higher than other advanced economies including Britain and Japan, which are expected grow 1 percent, Germany half a percent and Italy which is predicted to remain flat.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]